The likely scenario for the oil market, taking into account actions taken by the major players - the US and Saudi Arabia.
In early July, OPEC decided not to change oil production quotas for its members. This decision was made at prices 40% lower than in the same period last year and very strongly pushed the probability of a return to price above $ 100 per barrel, which is prevalent in the market of the past four years.
Current production level of member countries of OPEC keeps oil prices under pressure, which in turn negates the booming development of shale deposits in the United States that were profitable in the quotation about $ 100 per barrel. This fully explains the position of the cartel seeks to maintain its market share.
Reducing OPEC production is now will only lead to an increase in deposits in the US, but does not affect the rise in prices. Moreover, the fall in prices below $ 45 a barrel has not stopped the flow of investments in the US drilling companies. According to The Wall Street Journal, the US oil companies in the first quarter 2015 have attracted equity capital in the amount of $ 17 billion, exceeding the previous year, when prices were much higher.
The main goal of OPEC is now - to convince investors that in the foreseeable future a significant reversal of oil prices is not expected. Repulsed so interested in long-term investments in US shale oil industry projects, cartel members will retain a leading position in the market of hydrocarbons.
This situation can last at least until the election of the American president in 2016. In addition, the nuclear agreement between Iran, the US and Europe can remove the existing sanctions and to bring to market Iranian oil. Also among exporters may be Iraq, Libya and Nigeria.
A possible victory in a price war with the United States in the coming year to help Saudi Arabia to maintain record levels of oil production in the next 10 years. The Saudis have already said they do not intend to increase the volume from the current 12.5 million barrels per day. There is a theory that this decision was dictated by the fact that hydrocarbon reserves of oil and gas basin in the Gulf come to an end, and with it is connected the current aggressive policy of Saudi Arabia against the US oil industry. The Saudis are simply unable to wait for the expected reduction in production at the fields of the United States in 2020.
In this scenario, Saudi Arabia is interested in the growth of prices to maximize the benefits of the relatively low cost of production of the volume of oil that can dry out the middle of the 20s .. This can seriously affect the world economy, as early as 2011 was announced forecast that by 2035, the CA will escalate daily production to 15 million barrels per day.
Eugene Zandman, CEO, JSC Financial Company Eurotrust